What is Subject to Capital Gains Tax?

Published / Last Updated on 09/03/2026

Capital Gains Tax applies when you dispose of an asset—whether by selling it, gifting it, transferring ownership, or receiving compensation for it. Assets include property, shares, investments, valuables, and other items of worth. Some disposals and assets are exempt, and special rules apply to gifts, family transfers, property, currency, insurance policies, and losses.

Summary

You may be liable for CGT whenever you dispose of an asset and make a gain. A disposal includes selling, gifting, transferring ownership, or receiving compensation. Some assets—such as your main home, personal possessions under £6,000, gilts, ISAs, and gambling winnings—are exempt. Special rules apply to transfers between spouses, gifts to family, property sales, foreign currency, life insurance policies, and capital losses.

What Counts as a Disposal

CGT may apply when you:

Sell an asset for money
Give an asset away to an individual or trust
Transfer ownership of property or investments
Transfer an asset for less than market value (HMRC uses full market value)
Receive compensation for damage or loss
Sell rights or benefits connected to an asset
Realise a loss, such as shares becoming worthless

The disposal date is the date the asset must be valued.

Valuing Assets for CGT

Sale proceeds:
The sale price is normally used.

Below‑market transfers:
If you sell or gift an asset for less than its true value, HMRC uses the full market value, not the amount received.

Transfers Between Spouses or Civil Partners

Transfers between spouses or civil partners are not subject to CGT, provided they lived together at some point during the tax year.

Gains, losses, and base cost transfer to the receiving spouse
Useful for tax planning if one partner pays tax at a lower rate

Gifts to Other Family Members

Transfers to close family members (other than a spouse or civil partner) are not arm’s‑length transactions.

HMRC uses market value, not the actual sale or gift price
Prevents undervaluing assets to reduce CGT

CGT on Death

There is no CGT on death.

Beneficiaries inherit assets at market value on the date of death
Inheritance Tax may still apply to the estate

Assets Exempt From CGT

Common CGT‑exempt assets include:

Annual CGT allowance
Main home (Private Residence Relief)
Private car
National Savings Certificates and Premium Bonds
UK government gilts (held by individuals)
Life insurance policies (if you are the original owner)
Wasting assets with a life under 50 years (e.g., caravans, boats)
Personal possessions sold for under £6,000
War medals
Gambling winnings
Compensation payments
Tax‑privileged investments (pensions, ISAs, PEPs, CTFs, VCTs, EIS, employee share schemes)
Woodlands
Gifts to charities and national institutions

CGT on Your Home and Property

Main Home

Your main residence is exempt under Private Residence Relief.

Land Attached to Your Home

Up to half a hectare is normally exempt.
Land beyond this may be taxable.

Partial Land Disposals

Small disposals (e.g., selling a strip of land) may qualify for an election to avoid treating it as a separate CGT disposal.

Second Homes and Investment Properties

Gains on second homes, holiday lets, and rental properties are fully taxable.
If you lived in the property for part of the ownership period, a proportion of the gain may be exempt.

CGT on Property Investment

Gains on your main home are exempt
Gains on any other property are taxable
Periods of occupation can reduce the taxable gain
Electing which property is your main residence affects future CGT liabilities

CGT on Foreign Currency

Personal use:
Gains on currency bought for personal spending abroad are exempt.

Investment:
Gains on currency held for investment or speculation are taxable.
CGT is calculated using the sterling value at acquisition and disposal.

CGT on Life Insurance Policies

Normally exempt if you are the original policyholder and the payout is due to maturity, illness, or death.

CGT may apply if:

You bought the policy from someone else (e.g., traded endowment)
The policy was transferred to you after an assignment

Using Capital Losses

Losses can be set against gains in the same tax year
Unused losses can be carried forward indefinitely
Losses cannot be transferred between spouses or civil partners

Income Schedules and Losses

Losses generally cannot be offset across income schedules.
Example: Rental losses cannot reduce employment income.
Capital losses can be carried forward and used against future capital gains.